Clark & Trevithick | The FCPA, and What You Need to Know to Avoid Trouble

March 19, 2012 Volume 4, No. 2

This edition of Currents is from Eric L. Dobberteen, Esq., a member of the litigation and white collar crime practice teams. Please contact Eric Dobberteen to inquire about the subject matter of this issue.

Bribe?!? What Bribe?!? - Continued

Part one of this three part series shows that the Department of Justice (DOJ) interprets the Foreign Corrupt Practices Act (FCPA) broadly and that this can lead to United States businesses unintentionally engaging in behavior that might be construed as bribery under the FCPA.

Read part two below to see why businesses without a compliance program might consider paying attention to the FCPA now.

PART ONE: What is the FCPA?

PART TWO: Why Worry About the FCPA Now?

PART THREE: Can Trouble With the FCPA Be Avoided?

Why Worry About the FCPA Now?

Why worry now about a 34-year old statute, especially if your company has been exporting over the years without a problem and without paying any real attention to the FCPA? The reason, quite simply, is that the federal government has announced a "new era of FCPA enforcement" with "aggressive" enforcement that is "here to stay". For instance:

in the past 6 years, the DOJ has quadrupled the number of FCPA cases it has investigated;

in 2010, the DOJ imposed over $1 billion in criminal penalties, the most in any 12 month period since enactment of the statute;

in the last two years (approximately) over 50 individuals were charged in FCPA-related cases and nearly $2 billion in penalties/fines were collected (in 2004, only 2 individuals were charged and only $11 million in penalties/fines were collected);

the DOJ has formed an FCPA Unit with over a dozen prosecutors focused on FCPA cases;

under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, there was included a whistle blower bounty program that is expected to contribute further to the number of FCPA investigations undertaken.

In April and May 2011, a Los Angeles federal court jury heard evidence against a small privately-held company founded in 1947 and based in Azusa, California, that was indicted along with its President and one other executive, for violating the FCPA by funneling millions of dollars of bribes to two officials of the Comisión Federal de Electricidad, an electric utility company that is wholly-owned by the Mexican government. After hearing several weeks of testimony, the jury convicted the company and the two executives. This was one of the few cases under the FCPA to actually go to trial. Upon conviction, the Company faced fines of at least $2,000,000 along with possible debarment and/or suspension from obtaining government contracts. The individual defendants faced five year prison terms and fines of $100,000 each. Fortunately, for the defendants, the court eventually threw out all the convictions and dismissed the case. That’s not because the judge found legal problems with the FCPA. The case was dismissed because of government misconduct – a result that is very rare. These defendants were incredibly lucky; future ones won’t be.

Continue to Part Three: Can Trouble With the FCPA Be Avoided?

Contact Us
For further information on complying with the Act, please contact Eric L. Dobberteen, Esq. at EDobberteen@clarktrev.com or at 213.629.5700. Website: www.ClarkTrev.com.

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Clark & Trevithick, PLC is a full service law firm representing clients throughout California and western states for more than three decades. Our practice includes specialization in federal and state taxation law and tax reporting compliance, as well as estate planning for owners of closely-held businesses and other high net worth individuals. We also counsel on the sale of closely-held businesses. We develop methods for transferring wealth to surviving spouses and descendants by the most efficient and tax-advantaged methods available. Our practice profile also includes corporate, real estate, litigation, creditors' rights and remedies and employment law matters.

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